Political uncertainty and trade tensions, an increasing pressure on sustainability and carbon emissions, and a general unease about the weakness of the global economy were some of the headlines emanating from the World Economic Forum (WEF) at Davos.
CEO confidence in their own company’s success is taken as a leading indicator of wider economic growth. Looking at PWC’s CEO survey over the past ten years, there is evidently a strong correlation between CEO confidence in their own business success in the year ahead and actual global GDP growth. The worrying statistic is that the 2019 survey reports a 12% decline in the net balance of CEO confidence from last year.
The question is, how can we foster greater confidence? To do so, we need to dig beneath the surface. Whilst there is a 12% net balance decline in CEO confidence, if you distinguish between CEOs that are more confident vs those who are less so, you can unpick the issues which are of importance to all CEOs but are considered strategic priorities to the more confident CEOs. These few critical issues go beyond the immediate day-to-day boardroom pressures and address more important global issues, which help create the platform for growth across the business community. Here, a couple of issues come to the fore (in addition to wider geopolitical and protectionist concerns): the pace of technological change (including cyber-threats), and the availability of key skills.
This correlates with a recent Mercer study of global talent trends which found that 73% of executives predict significant industry disruption in the next 3 years (up from 26% in 2018). Over half also expect AI and automation to replace one on five of current jobs. Organisational transformation in the face of unprecedented technological change will define our era. However, the study also quotes a WEF Global Risk Report which outlines that this transformation is most significantly threatened by human capital risks, including personal stress over lack of control in the face of uncertainty.
So how do we navigate this constant process of transformation and re-evaluation? More than ever before, every organisation must have a clear understanding of their future value, and the brand they need to build around this. The most successful companies will be those that address data analytics and AI seriously, and utilise these not just to target their customers and make their operations more efficient, but also to challenge their direction and feed innovation. But beyond these organisational priorities, the fundamental underlying success factor lies in people. Amidst the fear of AI wiping out swathes of roles, it is easy to miss the bigger problem – actually filling the jobs that new technologies are creating. Back to the PWC CEO survey: the lack of availability of key skills is one of the top 10 threats to growth in every region around the world. More than 60 percent of CEOs say that it is “more difficult” to hire workers in their industry, up from 43 percent just seven years ago. A “deficit in supply of skilled workers” is the leading reason for that. We must also consider this in the context of estimates from the WEF that by 2022 AI and automation will create a net increase of 58 million jobs.
There is no question that the workforce today is more mobile and empowered. Organisations who are able to attract and retain the best talent must understand how to keep employees engaged and motivated. To achieve this, it is vital to understand their future value, redesign roles accordingly, and enable personal development through broader exposure, upskilling, collaboration and networked learning. Building engagement makes people feel part of the change they are experiencing. A sense of combined direction builds confidence, fosters communication and innovation, and keeps the people at the heart of the business abreast of the wave of transformation. They are part of the revolution, not merely subject to it.
If you would like to find out more about how we can help you, or perhaps to discuss a specific assignment, please do not hesitate to contact Tim Drake for an initial confidential discussion.Continue Reading